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An Analysis of Tax Compliance Intentions Using the Theory of Planned Behavior in Different Organization Types

Autor:   •  February 23, 2018  •  4,758 Words (20 Pages)  •  139 Views

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Although tax evasion is seemed to be a problem that could never be completely eliminated. There are measures that could be taken to at least reduce the issue of tax evasion. An awareness should be created among the people and motivate the wealthy section of the society to pay taxes. The BIR should introduce social awareness programs in cooperation with other institutions such as schools and universities to raise awareness about tax compliance and its benefit to the society. The Government should also perform some tax reforms to simplify the current tax system of the Philippines which allows accountants and other professional to abuse this complexity. Although there are very strict penalties for those who are not filing their taxes correctly, very few were actually penalized. Therefore, the BIR needs to be more stringent against tax evaders to encourage them to comply with the law.



According to the theory of planned behavior (TPB), individual behaviors in the society are influenced by certain factors for a definite cause in a planned way (Benk, Çakmak, & Budak, 2011). This theory proposed that attitude towards the behavior, subjective norm and perceived behavioral control are the three independent variables which determines the intention in order to perform a certain behavior (Ajzen, 1991). The quality of intention, as explained by these variables, together with the purpose are expected to provide a reason why a certain individual act on the questioned behavior (Benk et al., 2011). Attitude is the individual’s degree of evaluation or appraisal on beliefs, whether favorable or unfavorable, in performing a certain behavior; subjective norm as the perceived pressure of an individual from the other people in performing the behavior and perceived behavioral control as the degree of difficulty experienced due to anticipated inhibitions in the performance of the behavior (Ajzen & Fishbein, 2005). Figure 1 illustrates how intention is regarded as the factor for the degree of individual efforts to perform a certain behavior.

Figure 1. Theory of planned behavior (Ajzen, 1991)

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Tax compliance refers to the honest behavior of declaring all taxable income and deducting legal expenses and timely payment of taxes. Generally, taxpayers do not like paying taxes for they see it as a reduction of income so as much as possible they avoid it or evade it (van Raaij, 2016). This tendency was tried to be explained by a lot of literature about tax compliance intentions. Previous studies reflected various kinds of taxpayers ranging from low-income individual taxpayers which deemed insignificant (Efebera, Hayes, Hunton, & O’Neil, 2004), including small and medium sized corporations (Azrina Mohd Yusof, Ming Ling, & Bee Wah, 2014) to ultimately the large domestic and multinational corporations (Alm & McClellan, 2012). Though researches about tax compliance originated from the economic theories where taxpayers comply on paying taxes if the benefit of doing it exceeds the cost, recent ones based on sociological and psychological theories found that “human elements” played an important part in taxpayer’s compliance decisions (Devos, 2014). Using the TPB model used by Efebera et al (2004) and Benk et al (2011), Fig. 2 illustrates the variables essential to the realization of tax compliance intention which will govern the behavior of different organizations of taxpayer.

Figure 2. Research model for the tax compliance

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Equity. The first component in the TPB is the perception of equity and fairness of the taxpayer about paying taxes and in the tax system (Benk et al., 2011). It may be on three different levels, namely; vertical equity, horizontal equity and exchange equity (Efebera et al, 2004; Devos, 2014). Vertical equity is the perception tax burden with regards to all taxpayers, horizontal equity for the individuals own view with regards to their paying of taxes and exchange equity is the measurement of perception with regards to goods and services received in return for the taxes paid (Devos, 2014). Quoting the statement of van Raaiji, “Tax compliance increases if people perceive taxes as fair and equitable, trust the government and tax authorities, and perceive paying taxes as a civic duty” (2016). In addition, most taxpayers perceived fairness as the most important factor that when the perception of fairness is high results to high compliance (Batrancea, Nichita, & Batrancea, 2012). Therefore, it is hypothesized that:

H1: There is a significant relationship between tax compliance intentions and perceptions of (H1a) vertical equity (H1b) horizontal equity and (H1c) exchange equity.

Normative Expectations. The normative expectations are the effect of the attitude adopted by the society with regards to paying taxes where the taxpayer exist (Benk et al., 2011). It is not just outside influences were included in social norms but also the personal moral beliefs (Bobek, Hageman, & Kelliher, 2013) which are part of what was considered group motivations (Alm J. , 2014). An individual is likely to declare and pay taxes properly if they are reminded of their norms and moral standards which abides with the proper filling of tax returns (van Raaij, 2016). The same is true if the society favors the avoidance or the evasion of taxes for various reasons, then it is expected that the individual will avoid or evade paying of taxes (Alm, 2012; Batrancea et al, 2012). Therefore, this research hypothesized that:

H2: There is a significant relationship between tax compliance intentions and social norms (H2a), and Moral norms (H2b).

Legal Sanctions. The last variable in the TPB is the legal sanction. It is the developed attitude from laws against unfavorable behaviors against paying taxes and will be observed thru detection risk and penalty magnitude (Benk et al., 2011). It is mainly part of economic approach which shows that income declaration for tax purposes increases as the perception of detection risk and penalty magnitude increases (Alm J. , 2012). According to van Raaij, “Taxpayers, and especially avoiders and evaders, fear tax audits, especially because they have


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